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Bitcoin Pizza Day: tracking the progress of bitcoin as a currency

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Bitcoin Pizza Day 2019

Bitcoin Pizza Day came about after an early bitcoin enthusiast and developer, Laszlo Hanyecz from Florida paid 10,000 bitcoins for 2 large pizzas. This was on May 22, 2010, a little over a year after bitcoin was launched. It is widely believed to be the first purchase with bitcoin and it is celebrated as Bitcoin Pizza Day. 2019 marks the 9th year anniversary.

The event sparked more interest in bitcoin in terms of whether it can be used as a currency for buying goods and services.  At the time, there were no widely known bitcoin exchanges that one could convert bitcoin to fiat currency easily. Furthermore, there were no merchant outlets that accepted bitcoin as payment. Laszlo posted online on a popular bitcointalk forum and someone named Jeremy Sturdivant responded with an offer.  10,000 bitcoins at the time were estimated to be worth $41. It is believed that the guy who bought the bitcoins then contacted the pizza guy and paid via credit card, thus keeping the bitcoins. So it was not a direct transaction from Laszlo to Pizza outlet.

You can check out the post on bitcointalk forum.

Bitcoin’s price at the time was largely based on theoretical values and it had not gained the attention of people outside the creator Satoshi Nakamoto and probably a few online cryptography enthusiasts. Going by today’s price level, 10,000 bitcoins are worth about $80M!!. Since then, more people, platforms, and merchants accept bitcoin and other cryptocurrencies for payment. Notwithstanding, it is important to note that even after the Pizza transaction, Bitcoin-based payments did not immediately catch-up as inherent challenges existed and some do still today.

Some of the existing developments, as well as challenges of bitcoin as a currency, are;

Volatility: the price of bitcoin still changes rapidly making it hard to properly value the price of goods and services. For example in the last 2 weeks of May alone, Bitcoin has moved from $6000 to $8000 and down to $7000 and then again to around $8000 at the time of writing. This means that if you were buying a cup of coffee within the last 2 weeks, it would cost differently, in bitcoin’s terms, each time.

Confirmation times: when using fiat currency as a means of online payment, confirmation time for payment is usually a few seconds. However, for bitcoin, it could take a few minutes or even longer in certain cases.

Payment processors: most merchants cannot directly accept bitcoin unless they host a full node or use a payment processor. Payment processors make it easier for merchants to easily convert the crypto to fiat instantly. For example, recently, big-name retailers such as Whole Foods announced that they were accepting bitcoin as payment. However, they were doing so through payment companies- Flexa and Gemini at their stores. When a customer pays in crypto, it is immediately converted to fiat equivalent, thus shielding the retailer from price volatility. This also applies to online payments.

Or digital gold?

The lightning network has been suggested as the most viable solution for fast payments, especially for micropayments. However, it is still a work in progress. Nonetheless, thoughts remain divided on whether bitcoin is more suitable as a currency or alternative store of value. As a store value, it is likened to digital gold whereby holders can preserve some of their wealth in cryptocurrencies such as bitcoin instead of gold. The argument is that bitcoin is more accessible to more people, less bulky and has actually performed better than gold when you look at the last 10 years. These are ideological differences that will continue to spark debate in the future.

To commemorate Bitcoin pizza day, Have a pizza this week, won’t you?

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